Monday, 19 January 2009

The aim of new European Community (European Union) Defence Transfers Directive is to cut red tape, reducing waste and delays, when defence-related products are bought and sold within the European Union.

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The Defence Transfers Directive was adopted by the European Parliament on 16 December 2008. The new Directive is still waiting for first reading (formal adoption) by the Council, but since the amendments have been agreed between the European Parliament and the Council, the EP text should be the same as the one to be published in the Official Journal of the European Union.

The Defence Transfers Directive, officially Directive 2009/.../EC of the European Parliament and of the Council on simplifying terms and conditions of transfers of defence-related products within the Community, is available here:

The aim of the new Defence Transfers Directive is to make intra-Community transfers of defence-related products more compatible with the internal market, by simplifying rules and procedures.

Recitals 1 to 4 of the Directive explain the background:

(1) The Treaty provides for the establishment of an internal market, including the abolition between Member States of obstacles to freedom of movement for goods and services, and the institution of a system ensuring that competition in the common market is not distorted.

(2) The Treaty provisions establishing the internal market apply to all goods and services provided against remuneration including defence-related products but do not preclude Member States under certain conditions from taking other measures in individual cases where they consider it necessary to protect essential interests of their security.

(3) The laws, regulations and administrative measures in Member States concerning the transfer of defence-related products within the Community contain disparities, which may impede the free movement of defence-related products and may distort competition within the internal market, hampering innovation, industrial cooperation and the competitiveness of the defence industry in the European Union.

(4) The objectives pursued generally by the laws and regulations of Member States include the preservation of human rights, peace, security and stability through systems of strict control and restriction of exportation and proliferation of defence-related products to third countries as well as to other Member States.

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Transfer and export policies

The member states of the European Union still decide on their transfer and export policies with regard to defence-related products.

Recitals 6 and 7 explain that the Defence Transfers Directive does not limit the transfer policies or export policies of member states:

(6) Those laws and regulations of Member States therefore need to be harmonised in such a way as to simplify the intra-community transfer of defence-related products in order to ensure the proper functioning of the internal market. This Directive only deals with rules and procedures as far as defence-related products are concerned, and does not consequently affect transfer policies of Member States.

(7) Harmonisation of those laws and regulations of Member States should not prejudice international obligations and commitments of Member States or their discretion as regards policy on the export of defence-related products.

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Treaty derogations on security grounds

The member states can still evoke their (essential) security interests according to Articles 30 and 296(1)(b) and 296(1)(a) of the Treaty establishing the European Community (TEC), although the provisions and ECJ case law limit the scope of such derogations. In other words, exceptions have to be justified.

The derogations in Article 30 TEC include prohibitions or restrictions on imports, exports or goods in transit on grounds of public policy and public security.

Article 296(1)(b) TEC concerns the protection of essential security interests of a member state in connection with the production or trade in arms, munitions and war material (as defined by the Council on 15 April 1958).

Article 296(1)(a) allows a member state to withhold information, if the disclosure would be contrary to its essential security interests.

Recital 5 of the Defence Transfers Directive acknowledges that there are legitimate exceptions to the free movement of goods and services, on a case by case basis. The treaty derogations still apply, if the conditions are met:

(5) Such restrictions on the movement of defence-related products within the Community cannot be abolished generally through direct application of the principles of free movement of goods and services provided by the Treaty as those restrictions may be justified on a case by case basis in accordance with Articles 30 or 296 of the Treaty, which continue to be applicable by Member States provided their conditions are met.

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First and second pillar

The Defence Transfers Directive is based on the first pillar (Community pillar), with its internal market rules. The sale of defence-related products within the European Community (European Union) is harmonised to some extent, but matters relating to the common foreign and security policy (CFSP), including the common security and defence policy (CSDP), belong to the intergovernmental second pillar of the European Union.

The fourth paragraph states that the minimum rules of the Directive are no obstacle to further intergovernmental cooperation in this field.

This is in line with the presentation given by Recital 28:

(28) Member States should remain entitled to pursue and further develop their intergovernmental cooperation, whilst respecting the provisions of this Directive.

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Adopted text

Here is the text of Article 1 of the Defence Transfers Directive, as adopted by the European Parliament:

Article 1Subject matter

1. The aim of this Directive is to simplify rules and procedures applicable to the intra-Community transfer of defence-related products in order to ensure proper functioning of the internal market.

2. This Directive does not affect the discretion of Member States as regards policy on the export of defence-related products.

3. The application of this Directive shall be subject to Articles 30 and 296 of the Treaty.

4. This Directive does not affect the possibility for Member States to pursue and further develop intergovernmental co-operations, whilst respecting its provisions.

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Scope

The Defence Transfers Directive applies to intra-Community transfers of defence-related products. These have been listed in the Annex to the Directive.

Recitals 9 and 37 of the Directive express the desire to update the Annex list to be made identical in scope with the Common Military List of the European Union (CML):

(9) This Directive should cover all the defence-related products which correspond to those listed in the Common Military List of the European Union including components and technologies.

(37) The list in the Annex of defence-related products should be updated in strict conformity with the Common Military List of the European Union (CML).

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(Footnote 4 referred to the CML as published in 2007, but there is a later update, published OJEU 18.4.2008 C 98/1.)

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Adopted text

Here is the adopted text of Article 2:

Article 2Scope

This Directive applies to defence-related products as listed in the Annex.

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Definitions

Some of the terms of the Defence Transfer Directive are defined in Article 3, but I let the adopted text speak for itself:

Article 3Definitions

For the purposes of this Directive , the following definitions shall apply:

1) "defence-related product" means any product listed in the Annex;

2) "transfer" means any transmission or movement of a defence-related product from a supplier to a recipient in another Member State;

3) "supplier" means the legal or natural person established within the Community who is legally responsible for a transfer;

4) "recipient" means the legal or natural person established within the Community who is legally responsible for a receipt of a transfer in another Member State;

5) "transfer licence" means an authorisation by a national authority of a Member State for suppliers to transfer defence-related products to a recipient in another Member State;

6) "export licence" means an authorisation to supply defence-related products to a legal or natural person in any third country;

7) "passage through" means the transport of defence-related products through one or more Member States other than the Member State of dispatch and the Member State of destination.